We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year’.
View our latest analysis for Apollo Commercial Real Estate Finance
Apollo Commercial Real Estate Finance Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Director Eric Press bought US$660k worth of shares at a price of US$6.85 per share. Even though the purchase was made at a significantly lower price than the recent price (US$9.12), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn’t tell us much about how insiders feel about the current share price.
Apollo Commercial Real Estate Finance insiders may have bought shares in the last year, but they didn’t sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Apollo Commercial Real Estate Finance is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Apollo Commercial Real Estate Finance insiders own about US$6.5m worth of shares (which is 0.5% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we’re not overly impressed by these holdings.
So What Does This Data Suggest About Apollo Commercial Real Estate Finance Insiders?
It doesn’t really mean much that no insider has traded Apollo Commercial Real Estate Finance shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. We’d like to see bigger individual holdings. However, we don’t see anything to make us think Apollo Commercial Real Estate Finance insiders are doubting the company. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. Be aware that Apollo Commercial Real Estate Finance is showing 5 warning signs in our investment analysis, and 2 of those are potentially serious…
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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